Nickel may fall the most; metals seen retreating
|
|
|
Nickel will lead a decline in industrial metals next year as stockpiles expand and demand slows with the US housing market, a survey of analysts showed.
Nickel for immediate delivery will average $29,500 a tonnes next year on the London Metal Exchange, according to the median of 19 analysts surveyed by Bloomberg News this month. The price is 21 per cent below this year’s average and 46 per cent less than the record west in May. Lead will be the best performer for a second year, with a 4 per cent gain, the survey showed.
Industrial metals are falling for the first time since 2001 as the deteriorating US housing market curbs demand for Copper, zinc and tin. Copper inventories increased 8.5 per cent this year and are four times higher than at the end of 2004, LME data show.
“The US housing market won’t turn around until the first quarter of 2009, and that will be difficult for base metals,” said Mr. Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. Mr. O’Neill gave the most accurate forecast for nickel this year among 28 analysts surveyed by Bloomberg.
The five-year rally generated record profits for Melbourne-based BHP Billiton Ltd and Rio Tinto Group, based in London. The gains also prompted $156.4 billion of mergers among mining companies this year.
Nickel is the second-worst performer among the six metals traded on the LME, falling 21 per cent to $26,450 a tonne. Zinc fell the most, losing 43 per cent to $2,425 a tonne.
NICKEL STOCKPILES
LME monitored stockpiles of nickel, mostly used in stainless steel, surged almost six-fold this year. The slump in prices prompted steelmakers including Dusseldorf-based ThyssenKrupp AG to write down the value of inventories.
Lower prices failed to curb supply. Production will probably exceed demand by 1-lakh tonnes next year, according to Mr. Alan Heap, director of commodity analysis at Citigroup Inc in Sydney. That’s more than twice the metal held in warehouses monitored by the LME.
Mr. Heap expects nickel to average $22,046 a tonne next year, the lowest forecast among the analysts surveyed. Not everyone is as pessimistic.
“We’ve seen the worst in nickel,” said Mr. Jon Berg theil, head of global metals strategy at JPMorgan Securities Ltd in London. He estimates miners will produce 16,000 tonnes more than consumers require in 2008, compared with 25,000 tonnes this year, because Chinese demand will jump 23 per cent, compensating for slower growth in the US, Japan and Europe.
LIMITED GROWTH
Copper for immediate delivery will fall 2.3 per cent to an average $6,975 a tonne this year, based on the median estimate in the survey.
The combination of limited supply growth and labour strikes may send prices as high as $12,000 a tonne, said Mr. Jeremy Gray, an analyst at Credit Suisse Group in London. Mr. Gray said in January copper would average $7,164 last year, $22 more than the actual average.
Benchmark three-month copper reached a record $8,800 in May.
Mines will expand o more than 2.3 per cent next year, Mr. Gray said. An increase of 1.5 per cent would fall short of demand, he said.
Supplies from Codelco, the world’s largest copper producer, dropped in the first nine months because of a strike and aging facilities. Workers at Grupo Mexico SA, the country’s largest copper mine, have been on strike for four months.
|
|
|
|
Source : Business Line |
|
|
|
RecycleINme.com. All Rights Reserved
